KOKODA Property has added more than $5.5 million to the bottom line of its first Brisbane development, selling the management rights to the $250 million Chester and Ella towers at Newstead just as construction is about to start.

The sale caps a run of off-the-plan management rights sales worth almost $10 million by national agency Resort Brokers, including the first two to be sold in the Sydney market for at least 10 years.

Specialist broker Tim Crooks says the deals underline the strength of the new residential management rights market despite of reports of an investment apartment oversupply.

Kokoda’s Chester and Ella management rights business has sold for $4.632 million to one of Australia’s largest, privately-owned operators, Aurora Assets Management Group.

Aurora also picked up a luxury three-bedroom apartment in the upscale 320-unit twin towers for $895,000.

Chester and Ella, a $250 million development that attracted $120 million in non-bank funding from Goldman Sachs, will start construction this month with close to 90 per cent of its apartments pre-sold.

Melbourne-based Kokoda has set a high-end benchmark for its Brisbane debut project, with the two 18-storey buildings featuring shared hotel-style amenities including concierge, rooftop terrace, health and wellness centre, private residents’ lounge and dining rooms, cinema, pools, spa and outdoor kitchen.

“The striking design and quality of Chester and Ella and the knock-out location just two kilometres from the CBD with James Street, The Emporium and The Gasworks right there, are what made these management rights such a compelling proposition,” Mr Crooks said.

Named for the streets at their base and designed by renowned architects Hayball, Chester will project more masculine, angular styling, while Ella will have a curvaceous form.

The apartments, which have attracted a high proportion of investor buyers, are due for completion towards the end of 2019.

Backed by the strong values demonstrated in Queensland, the management rights industry is re-entering the Sydney development landscape after about a decade out of favour.

Resort Brokers has just settled two off-the-plan management rights sales there, the 175-unit One A at Erskinville and 100-apartment Ashfield Central developments, by ASX-listed Abacus Property Group for a total of $2.2 million.

“Publicity a long time ago about a small number of disputes between managers and owners’ corporations, plus the influence of real estate agents with vested interests in property management, put a dampener on the industry in the Sydney market,” Mr Crooks explained.

“But developers have again realised the benefits for all stakeholders that flow when management rights are incorporated in new residential developments, and these are the first two of many more we expect will follow,” he said.

The two projects, which have an investor owner profile of roughly 50 per cent, have sold with 10-year management agreements compared to Queensland’s 25-year terms.

The Chester and Ella management rights buy by Aurora closely follows their purchase of the rights to another major Newstead apartment project, Haven, through Resort Brokers.

Developed by HCAP Developments, the rights to the luxury 220-apartment Haven, with more than 170 units in its letting pool, sold for $3.14 million.

Mr Crooks said Aurora’s experience there, where all apartments were fully leased within three months without need of a targeted marketing campaign, encouraged their further expansion in the Newstead market.

“The combination of its unique island site, amenities, views and superior retail created incredible rental demand for Haven with more than 1,200 enquires and all 176 apartments rented in very quickly,” Mr Crooks said.

“It absolutely confirms rental demand for quality apartments in Brisbane is tracking well above expectations.”

Aurora Asset Management Director Jenny Xiong said “As one of the biggest management rights operators in the country, Aurora Asset Management is currently managing over 3000+ properties across 13 buildings in Queensland and we have successfully launched buildings for the likes of Aria, Metro Property and most recently Haven by HCAP developments.

It was a natural progression for us to expand our portfolio into NSW and Victoria with the acquisition of OneA and Ashfield Central creating a strong foundation to support our company’s growth strategy.  It’s exciting that developers are starting to understand it’s not only about the financial upside but the higher level of service their lot owners receive under this model.”

Tim Crooks continued to add, "We have seen Victoria/Melbourne experiencing strong momentum with multiple Management rights having been sold and settled for the likes of Gurner with Ikebana, White Horse Towers in Box Hill and more recently with the sale of Avant for World Class Land."

"The managemenr rights to Whitehorse Towers in Box Hill (529 apartments) which we sold as a part of the Art Series Hotel portfolio for $52.5m on behalf of The Deague Group (consisting of 7 hotels and 1 management rights deals)"

"This year, we also sold the new Melbourne CBD Avant tower (55 levels, 456 apartments) operation for Singapore-listed World Class Global to international group Minor Hotels as Victoria’s first AVANI hotel."

Get to know Tim Crooks of Resort Brokers Australia

To discuss the sales in further detail, phone or email Tim Crooks via the below contact details.

See also:

Little Projects’ $210m Signature Broadbeach development management rights for sale

Rumba Resort Caloundra and Oceans Resort Hervey Bay management rights sold for $15m